Problem 1: If a firm permanently borrows $100 million at an interest rate of 8%, what is the present value of the interest tax shield? (Assume that the marginal corporate tax rate is 30%.)
- $8.00 million
- $5.60 million
- $30.00 million
- $26.67 million
Problem 2: If a firm permanently borrows $50 million at an interest rate of 10%, what is the present value of the interest tax shield? Assume a 30% marginal corporate tax rate.
- $50.0 million
- $25.0 million
- $15.0 million
- $1.5 million
Problem 3: German laws and accounting procedures are designed, generally, to protect interests of:
- shareholders.
- managers.
- creditors.
- employees